In the World Economic Outlook report, IMF revised down global growth forecasts as weakness in the second half of 2018 is expected to persist into the first half of 2019. IMF expects slowdown in 70% of world economy. Global growth would dropped from 3.6% in 2018 to 3.3% in 2019, revised down by -0.2%. There were negative revisions for several major economies including the euro area, Latin America, the United States, the United Kingdom, Canada, and Australia.
Nevertheless, IMF still expects growth to pickup again in second half of the year. There will be support from “significant monetary policy accommodation by major economies”. Fed, ECB, BoJ and BoE have “all shifted to a more accommodative stance”. Meanwhile, China has ramped up its fiscal and monetary stimulus. Outlook for US-China trade tensions has also “improved as the prospect of a trade agreement take shape”. “Global recession is not in the baseline projections,
However, IMF maintained “there are many downside risks”, including trade tensions that could “could flare up again and play out in other areas (such as the auto industry), with large disruptions to global supply chains.: Growth in Eurozone and China “may surprise on the downside”. Brexit risks remain “heightened”.
Here is a summary of the growth forecasts (comparing with January forecasts):
- World in 2019 at 3.3% (down -0.2%)
- World in 2020 at 3.6% (unchanged).
- US in 2019 at 2.3% (down -0.2%)
- US in 2020 at 1.9% (up 0.1%)
- Eurozone in 2019 at 1.3% (down -0.3%)
- Eurozone in 2020 at 1.5% (down -0.2%).
- Japan in 2019 at 1.0% (down -0.1%).
- Japan in 2020 at 0.5% (unchanged).
- China in 2019 at 6.3% (up 0.1%).
- China in 2020 at 6.1% (down -0.1%).
